Financial Market Imperfection, Overinvestment and Speculative Precaution

Imperfection of Credit Markets, Speculative Bubbles and Financial Accelerator in Morocco

The credit market continues to be the main mechanism for financing investments in developing countries, particularly in Morocco. In this sense, monetary and macro-prudential policies require the inclusion of this market in macroeconomic analysis. In this article, we use the model proposed by Bernanke et al. (1999) "BGG" in the case of Morocco to answer two main questions: is there a mechanism f...

Globalization under Financial Imperfection

The paper investigates the effects of international trade in goods and capital movement on the productivity distribution and industry-wide productivity when countries are heterogeneous in the quality of their financial institutions. In autarky, firm heterogeneity in their productivities arises in countries with poor financial institutions, while all firms adopt a high-productivity technology in...

Speculative Bubbles and Financial Crisis

Why are asset prices so much more volatile and so often detached from their fundamental values? Why does the bursting of …nancial bubbles depress the real economy? This paper addresses these questions by constructing an in…nite-horizon heterogeneous agent general equilibrium model with speculative bubbles. We characterize conditions under which storable goods, regardless of their intrinsic valu...

Financial market crisis and financial market channel

Lotteries , Inequality , and Market Imperfection : Galor and Zeira Go Gambling ∗

Following conventional wisdom, capital market imperfections are considered to be an obstacle to long-run growth and prosperity. In this paper a simple extension to the work of Galor and Zeira (1993) provides a caveat to this rule of thumb. Admitting lotteries the dynamics of the model changes fundamentally: the poverty trap found in the original work vanishes for a wide class of parameters. It ...